Wednesday, January 23, 2013

"A Chinese military officer has raised the spectre of nuclear weapons and warned Australia not to side with the United States and Japan as a territorial dispute in the East China Sea continues to escalate.

Senior Colonel Liu Mingfu, of the National Defence University, blamed America's ''orchestration'' and Japan's ''militarism'' for rising tensions over disputed islands known as the Senkaku in Japan and the Diaoyu in China.

''America is the global tiger and Japan is Asia's wolf and both are now madly biting China,'' Colonel Liu said. ''Of all the animals, Chinese people hate the wolf the most.'

As I stated yesterday, the Chinese military better be under the control of their civilian leaders, because a war with Japan over these islands would be the end of the current Chinese state. Not because of a military loss or victory - the Chinese military could probably force the Japanese to give up the Senkaku Islands - but because of the repercussions, both politically and economically. If the Reds want to return to a policy of isolationism and perhaps autarky, I guess a war is ok, but it would be right back to poverty and the status of an international pariah for everyone in China."

I am sure no international company would ever again locate their manufacturing there, and certainly the bonds the Chinese hold would immediately be declared worthless by every government that needs to reduce it's debt load anyway.

In addition, they might just suffer a military defeat after all, and that would literally cause heads to roll all across China.

Only a fool like Liu Mingfu would risk all that over so little. Let's hope that it's all just a bluff to see how much they can get from bullying.